To Fix The Debt, Compromise Is Key

This is TALK OF THE NATION. I'm Neal Conan in Washington. Later in the program, exit interviews with Senator Joseph Lieberman and Congressman Ron Paul as they leave Congress after many years. But first we continue our Opinion Page series on the fiscal cliff.

After they rejected President Obama's opening offer, Republicans issued a proposal of their own yesterday, which was promptly dismissed by the White House. One group that's already worked out a series of compromises to come up with a comprehensive proposal is a nonpartisan group called Fix the Debt. It emerged from the Simpson-Bowles Commission. Its ideas include higher taxes on the wealthy and tax reform, plus changes to Social Security and Medicare.

Former Republican Senator Pete Domenici serves on the steering committee of Fix the Debt, co-chairs the Debt Reduction Task Force at the Bipartisan Policy Center, and he joins us now by phone from his office in Washington, D.C., and it's good of you to be with us today.

SENATOR PETE DOMENICI: Thank you very much, Neal. I do want to clarify now, I'm not - I'm associated with the Bipartisan Policy Center. We put out our budget for use by the team working for the White House and the Republicans. It's not the same as the one you just announced.

CONAN: All right.

DOMENICI: OK, but anyway, we're all working at the same - working so hard and so long on trying to get something done because we're - people like me are doing this because they love the country, and they're worried about it. We've got a lot of us around, and we're trying to find our place in this thing, and it looks like the White House and the Republicans do have a way to get information in.

It's very hard for changes to be made and agreements. I don't know how they're doing that. It's a very strange kind of organization. But...

CONAN: Well, let me ask you, how much did the election change things? There's the same cast of characters, pretty much.

DOMENICI: Well, I - people that aren't negotiating, and I'm not there, but people that aren't are speculating on all kinds of things, in terms of the president is playing with more power, he acts like a tyrant because he won the election. I don't really see that at this point, that there is any big change because of the election.

CONAN: Well, the president, if he campaigned on one thing, it was raise taxes on the wealthy.

DOMENICI: Yeah, raise taxes on the top 2, which he labeled - the top 2 percent, which he labeled the wealthy. Whatever we did, we had to put that in that new tax code for him, as he said it was when he was running because he thought that was the only way to be fair.

CONAN: And so if that's his position, there are a lot of Republicans who say over my dead body.

DOMENICI: Well, there are a lot of Republicans who are saying over my dead body, or we would like to give you the same kind of cuts but not income tax cuts; get them from other places, that rich people pay taxes.

CONAN: Well, that's reform the tax code and change - things like put a cap on deductions, for example, mortgage deductions, that sort of thing.

DOMENICI: Yeah, that's - the whole tax expenditure, that's a huge part of the tax code. When you get around to that, some Republicans are saying instead of what we were talking about, do some things in that tax code to hit the rich.

CONAN: Well Senator Domenici, when we start talking about tax code, a lot of people's eyes glaze over. Can you get to the essence of this? What is this debate really about?

DOMENICI: Well, this debate is about - it starts out and it remained, although it's got a new name and some additional problems, but it started out as a genuine effort on the part of the leadership of each house to come up with a proposal that would save this country from the embarrassment and/or ruin of having the debt get so big that it exceeded GDP, gross domestic product, by 60, 70 and 80 percent and was growing by leaps and bounds.

And the reason it was started was because most experts think that that is unsustainable. And that's whatever word you want to use, use the worst you can because that means you can't continue as a country, the same kind of country. Things are going to happen that you become something else. You become less reliable, you debauch your money. All these things can happen to you.

And so it started two years ago, and two and a half, with each party working on it. That's where I got on a nonpartisan budget group and bipartisan, I should say. And we worked for a year. And we found out everything about this, and we voted and produced something that was bipartisan.

Now, the problem is we've got two approaches going on - and what may be three but two at least - one by the majority House, which says, don't count us out, we're still in the majority, one majority, we got elected, and we do run the House. We have the United States Senate, which acts like it's another negotiating body. And then we have the president and his people, and they're the third one. And they're trying to reduce that deficit, which cumulatively is the debt, which now exceeds $16 trillion.

CONAN: What, as you go through this, frustrates you the most about each of those parties. The Republicans, for example, in the House say whatever we do, we're not going to raise tax rates on the top 2 percent. The Democrats in the Senate say, you know, Social Security, off the table.

DOMENICI: Yeah, what - let me tell you what worries me the most is none of those things. It's negotiating an agreement of this content and this importance and this magnitude, negotiating it open in the public and putting out, one at a time, the basic things that you propose. That bothers me the most because that lends itself to all kinds of things that have nothing - that have the other side reacting in ways that have nothing to do with what they should, the way they should be thinking.

CONAN: So if we're negotiating in public, we're not really negotiating at all.

DOMENICI: That's correct. What we're doing is playing chicken, all kinds of games with each other. It's just a mess. You know, whenever you get to the entitlements, and so everybody knows, I'm out of the Senate three years and a half, but I was there for 36 years, and much of my work was budgeting. If I were there, I would be right in the middle of this. You would have been hearing from me for the last two years, and you'd be tired of my voice.

(LAUGHTER)

DOMENICI: And you, Neal, would have had so many times you would have said I don't want you anymore.

CONAN: Well, I doubt that, Senator.

DOMENICI: But anyway, to get back to what happened, these - the president didn't do much about it. He expressed a couple things back there two years ago, two and a half, that we had to do something about this ever-growing debt, and then he got into this budget state where he was blaming it all on President Bush.

Finds out when he finally gets re-elected, it doesn't matter who you want to blame it on, it's real, and it doesn't matter who you want to say caused it, it's now everybody's problem because if it should cause our monetary, money system to fall apart, there's no telling how bad off this country could go.

Those of who are interested, who have taken the time to listen to historians, listen to money experts tell us what might happen when that ratio of the debt to the gross product of the country gets big, and it's so big that it's carrying 200 or 300 percent, they just tell you right off you don't have any functioning country.

CONAN: And last - what is it, last year, the - one of the rating agencies cut the U.S. AAA rating for the first time not because there was any great concern about the economy of the United States but because of dysfunction in Washington, because the various parties could not agree.

DOMENICI: You've got it, my friend. They did that, and they're apt to do more. And right now I guess the point we ought to talk about to you and your listeners, understanding that I'm not there, and I'm not a player, a participant, but yet I'm a player, one of the outside groups that finds his way in through cracks and corners and talks to the people over there.

I think they are trying to get something, led by the secretary of the treasury, who's Geithner...

CONAN: Tim Geithner.

DOMENICI: Yeah, he's terrific, I think. Republicans have a wonderful man in Boehner, that Boehner's a straight shooter. Geithner is a very smart guy, and he acts fair to the Republicans. So I would think that he would be able to negotiate as well as anybody. And Tim Geithner, he's - I've talked with him many times before this thing started and occasionally since they've been in closed quarters.

We ought to talk about a few other things, but you pick yours and - you pick one, then I'll pick one.

CONAN: Well, we just have a couple of minutes left. So why don't you pick yours?

DOMENICI: Well, we've - they've already spent too much time, that is the Congress and the president, in getting a deal. So they can't, in my opinion, put together a real big debt reduction bill that the country and its people deserves. In the meantime, this tax problem came in, the Bush tax is going to expire, which was done by the law that adopted it, and that's going to put a big pressure on the budget.

And we've got a law that is so unreasonable that it ought to be repealed, the sequester. I think they're going to find a way to repeal the sequester. I think they're going to find a way to do all of the savings required in the appropriated accounts, annual billings, but I think they're going to be very short of savings in the entitlement programs, the long-term health care, which costs are going to go skyrocketing along while we sit around thinking everything's rosy. They may not find a way to solve that one.

I hope they do, but I see no evidence that they are doing that right. So I think they'll get two or three out of the four, and then question for everyone: will they put that together and say, take it, and some language saying we'll do more next year? I would have some further suggestions, but we don't have time.

CONAN: Well, Senator Domenici, thank you very much for your time today.

DOMENICI: Thank you, Neal, bye-bye.

CONAN: You are listening to TALK OF THE NATION from NPR News. Transcript provided by NPR, Copyright National Public Radio.